A charity which promotes recycling in Wales is being investigated by the Welsh Government while the Charity Commission has confirmed it has received concerns.

The Charity Commissionconfirmed it is discussions with registered charity Cylch – the Wales Community Recycling Network – after receiving concerns about loss of charity funding and whether conflicts of interest were properly managed.

The Welsh Government, which is the core funder of the charity, has confirmed its internal audit team is conducting an investigation.

Cardiff-based Cylch was set up in 2001. It is an umbrella body representing community groups and social enterprises.

It provides information, advice and support to existing and emerging community reuse, recycling, composting and reprocessing organisations across Wales.

It has about 100 members that carry out activities that range from furniture repair and sale to making products from recycled materials. Its members employ more than 600 staff.

In a statement the Charity Commission said: “We have received concerns about the charity. These concerns are linked to the loss of charity funds and whether conflicts of interest were properly managed when making decisions for the charity.

“We have examined the accounts and are in contact with the charity to discuss these matters. We are also in contact with the Welsh Government, as the charity’s main funder. We are not formally investigating the charity."

The Charity Commission registers and regulates charities in England and Wales. Cylch successfully applied for charitable status with the Charity Commission in 2003.

A spokesperson for the Welsh Government said: “There is an internal audit investigation progressing at present and it would therefore be inappropriate for us to comment further at this time. We await the findings of the investigation which is expected to conclude early this year.”

In March Minister for the Environment and Sustainable Development Minister John Griffiths announced continuation of core funding for Cylch over the next three years – up until 2014-15 – of £300,000 a year.

The funding is for a programme of support to deliver the Welsh Government’s targets in Towards Zero Waste – its overarching water strategy document for Wales.

It has also been confirmed that Cylch’s long-term chief executive Mal Williams has resigned. Richard Thomas has taken up the role as the charity’s acting chief executive.

Cylch said it would not comment until after the investigations were completed.

Its chairman Mike Croxford said that both inquiries were expected to be completed at the end of this month and that its staff were giving their full support.

He confirmed that Mr Williams stood down as chief executive last month and that his departure had been planned for a year. The chairman said that Mr Williams has remained as a trustee of the charity.